Budget 2016: PAHALa pyar seduces farmers with subsidies

The government is going to use PAHAL — the scheme to transfer cooking gas subsidy directly into consumers’ accounts — to put money in the hands of farmers in the hope of easing farm sector stress and reaping some political dividend.

Pilot projects are being launched in several districts to transfer fertiliser subsidy directly to farmers instead of manufacturers. This coincides with estimates of a lower subsidy bill in 2016-17 for food, fertilisers and kitchen fuel, thanks to low oil prices.

The scheme is expected to improve “quality of service delivery” to farmers and save money by plugging leakages due to fudging of sale figures.

The total food, fertiliser and kitchen fuels subsidy bill has been estimated at Rs 2,31,781.61 crore, approximately 4% lower than the revised estimate of Rs 2,41,856.58 crore for 2015-16.

Fertiliser subsidy has been pegged at Rs 70,000 crore for 2016-17 against Rs 72,437.58 crore estimated in 2015-16. Of this, Rs 51,000 crore has been earmarked for urea, which is controlled, and Rs 19,000 crore allotted for decontrolled phosphoric and potassic (P&K) fertilisers.

Food subsidy estimated for 2016-17, too, is down to Rs 134,834.61 crore from Rs 139,419 crore in the 2015-16 revised estimate. Subsidy on LPG and kerosene has been pared to Rs 26,947 crore for 2016-17 from an estimated Rs 30,000 crore this fiscal.

Big-bucks boost to gram panchayats

The finance minister announced a new scheme ‘Rashtriya Gram Swaraj Abhiyan’ to develop governance capabilities of panchayati raj institutions with an allocation of Rs 655 crore for this fiscal. Also, gram panchayats and municipalities will get Rs 2.87 lakh crore as grant-in-aid in line with the recommendations of the 14th Finance Commission. FM Arun Jaitley said it marked a 228% increase over the last five years. The funds will translate to an average assistance of over Rs 80 lakh per gram panchayat and over Rs 21crore per urban local body. Jaitley said the enhanced allocations could transform villages and small towns.

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The ongoing field development and EOR/IOR projects are expected to produce a cumulative of 54.6 million tonne (mt) of crude oil and 114 billion cubic meter (bcm) of natural gas in the next three to four years, the report said.